The timing could not have been better – or worse. Against a deteriorating market backdrop and with US authorities – including the Federal Deposit Insurance Corp, the Federal Reserve and the Treasury – scrambling to stop the burst credit bubble from completely bringing down the economy, the management of Chrysler, Ford and General Motors flew into Washington with their corporate begging bowl.
Using corporate jets to do so might not have been the smartest course of action, but at least they were able to offer a concrete illustration that there was waste they would be able to cut if they were provided with a $25 billion loan via the Tarp programme.
Congress was understandably reluctant to approve this liquidity line at the drop of a hat – they had already provided $25 billion to facilitate the creation of new lines of fuel-efficient vehicles.
Sovereign states are always, covertly or otherwise, on the hook for bailing out their banking systems. Banks are so integral to the operation of modern economies that politicians are virtually obliged to ensure that they are kept afloat when they run into trouble.
Does this public-good argument extend to industrial firms? Mainstream political culture in the US and elsewhere has eschewed government support in private enterprise, so the troubles affecting the auto sector touch a collective raw nerve.